Netfonds published solid Q3 figures with further sequential top and bottom line growth and confirmed its FY23 guidance. In detail:

• Gross sales came in at € 48.4m (21% yoy, 4% qoq), broadly in line with our estimate of € 49.0m. The sequential improvement is mainly driven by the strong growth of high margin AuM in the wealth and asset management (c. € 3bn AuM in Q3 vs eNuW: € 2.8bn after Q2), while overall AuA stagnated on record levels of € 22.7bn. Importantly, AuA inflows compensated for weaker stock market performance. Due to higher material expenses (relative to sales), net sales of only € 8.5m (20% yoy, -11% qoq) came in below our estimate of € 9.7m.
• EBITDA remained rather stable on high levels of € 1.3m (vs € -0.2m in Q2´22, -13% qoq), but significantly below our estimate of € 2.3m, solely due to the weaker net sales. While personnel expenses should have been in line with our estimates (eNuW: € 5.0m), other operating expenses should have been below (€ 2.2m vs eNuW: € 2.4m), despite further investments into the finfire platform.
• EBT of € 0.4m (vs € -0.6m in Q3´22) resulted from stable D&A of c. € 0.8m financial result of € -0.1m.

On the back of the solid Q3 figures, the FY23 guidance of € 185-190m gross sales and € 35-37m net sales looks well achievable given that 1) Q4 was historically the strongest quarter of the year and 2) stock markets rose close to all-time highs in November, which should fuel AuA/AuM. A guidance beat is still in the cards.

Apart from that, the proprietary, 360° finfire platform, which enables onboarded advisors to offer a wide range of investment, insurance, financing and banking solutions to its customers via one holistic platform, remains the company´s key mid- to long-term growth and scalability driver. Netfonds leading market position in an oligopolistic market with high entry barriers and long-term structural growth drivers (growing AuM´s and number of advisors, ongoing digitization of the financial sector, stricter regulation) should further support future growth.

In light of the growth prospects, the promising mid-term guidance and the undemanding valuation, we reiterate BUY with an unchanged PT of € 70.00, based on DCF.